Chinese airlines surge by daily limit in Shanghai as oil slumps

(Bloomberg) -- Chinese airlines surged by their daily limit in Shanghai today on optimism declining oil prices will boost profitability as the carriers prepare to release full-year earnings next week.

The A-share listings of Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co. rose by the 10 percent maximum at 1:39 p.m. local time, extending the year’s gains as New York-traded oil neared a six-year low. Their Hong Kong-traded stocks were also stronger, each rising at least 5 percent.

While some airlines such as Cathay Pacific Airways Ltd. have hedged their jet-fuel requirements to guard against sudden oil price spikes, Chinese airlines have not. Shanghai-based China Eastern said 2014 profit rose as much as 60 percent due partly to a decline in aviation fuel.

The Shanghai Airport Authority, which manages both the city’s Pudong and Hongqiao airports, yesterday reported that February air cargo volumes jumped 23.5 percent from a year ago, and passenger numbers climbed 22.5 percent.

Chinese airlines carried almost 49.2 million passengers over the annual 40-day Spring Festival travel period, which concluded March 15, the official Xinhua news agency reported yesterday. That was an increase of 11.7 percent over the previous year.

Guangzhou-based China Southern, which is due to release earnings March 30, is now up 52 percent in Shanghai this year. Shanghai-based China Eastern, due to release earnings March 27, is up 36 percent, while Beijing-based Air China is up 23 percent ahead of earnings expected March 26.